The ongoing threat of strike action at Royal Mail has encouraged many of its customers to switch to rival carriers, while growth in new contracts has slowed, the firm admitted in its half year results.
As a result, the recently privatised carrier expects that parcel volumes for the nine months to December 2013 will remain broadly unchanged, depending on the strength of the Christmas peak.
Its results for the six months ending 29 September 2013 show a 147% growth in group pre-tax profit to £233m (H1 2012: £94m), while turnover grew 2% to £4.5bn from £4.3bn last year. Over half of the group’s turnover (51%) came from parcels.
However, strong growth in account parcels for its Parcelforce Worldwide business, which saw its new Chorley processing centre open in September, was offset by lower volumes in B2C deliveries as it felt the impact of the introduction of size-based pricing in April and the Communication Workers Union (CWU) balloted for strike action.
Its UK Parcels, International & Letters (UKPIL) division, which accounted for £3.7bn of the group’s turnover (2012: £3.6bn) saw parcel revenue increase by 9%.
“We saw a slightly higher rate of volume reduction than expected in the consumer, micro-SME and SME segments,” said chief executive Moya Greene.
Letter volumes also saw an expected 6% decline on last year’s figures. It closed three mail centres in Derby, Darlington and Bradford in H1 2013, and has since closed its Leicester mail centre. It plans four more closures in the second half.
Royal Mail and the CWU are due to meet again on Monday 2 December in order to come to an agreement over pay, legal protections, industrial stability and workloads. If an agreement is not reached, notice of strike action may be served the following day.
In a Business, Innovation and Skills Select Committee meeting today (27 November), business minister Vince Cable said valuing Royal Mail any higher than it had may have potentially lost investors when it floated last month.
